The practice of law is no different than the business of manufacturing automobiles or cheese. The essence is the same: the only way that these businesses grow is when the owners pay personal attention to their customers/clients.
I just read an article about someone who had dinner in a restaurant in Florida at which the employees were required to have 18 months of experience in the kitchen before they could service customers in the restaurant. One of the employees, according to the article, was proud that he was in that business 40 of the 50 years of the operation of the business. That kind of personal service and pride is similar to what happens in a successful law firm.
Nonetheless, the reality is that people think of law as a profession, not a business.
It was not until 1989 that a law practice was allowed to be sold. California became the first state in the country to say that a law practice could be sold. Why did California do this? Perhaps it was because the divorce courts got tired of dealing with cockamamie formulae for awarding money or a division of the estate to the non-income-earning spouse.
In any event, in 1991, the ABA adopted a similar provision — Rule 1.17. Some people interpreted the rule to mean that a lawyer had to retire from the practice of law in order to sell his practice. I didn’t interpret the rule that way, but I did interpret it to mean that a lawyer couldn’t sell just one part of his practice.
I had clients who had been practicing law for 50 years and wanted to sell their estate planning practice but keep the probate part; I advised them that although I didn’t believe that the rule necessarily meant they had to retire, they couldn’t piecemeal the sale. And so the rule as it was then written required the clients either to “play a game” or retire. Retiring was not an option because that would mean that they would be at home; and their wives quite clearly said that if they stayed home during the day after 50 years of not being home during the day, the wives would kill them.
Thus, they closed the estate planning practice and lost hundreds of thousand of dollars of value, continuing only with the probate.
That lesson was what prompted me to testify before the ABA committee that was considering a revision of Rule 1.17. For two years, the committee rejected my idea, but finally the court reporter understood what I was trying to say and crafted language even better than I would have proposed. And so in 2002 or 2003, ABA Model Rule 1.17 was amended and now provides for the sale of a law practice or area of a law practice.
Currently, there are only three or four states that prevent the sale of a law practice. Most states follow ABA Model Rule 1.17 word for word, although some states have some modifications or restrictions that the ABA does not have.
We still have a ways to go toward seeing the practice of law as a business. For example, I take issue with the idea of being required to notify clients. It’s one thing to encourage clients to pick up their files, but it’s another thing to be required to notify clients. In no other business is there a requirement for notification, let alone a waiting period.